The dollar made a powerful start to the new week on a lot of the major pairs, albeit that most of it came via gaps in prices. Usd/Cad made an unexpected move higher as the market initially signaled for possible lower prices in this week, after we saw the triangle structure in the past week. The reasons are probably in the U.S. Rescue plan, which should have a high impact on the dollar strength in the future, either way. Investors are slowly looking to build up their confidence in the dollar, some because of need, other out of speculative interest, especially after sentences like this one from the Nancy Pelosi, the speaker of the House: “This is not a Bail-out of the Wall Street it’s a Buy-in for taxpayers to rescue the economy.” If this is true, and the markets buy into it then we can expect a stronger dollar in this and the next few weeks, which could mean for the Eur/Usd to new yearly lows. If the markets reject it, and they might, the dollar may be looking at having a hard time against the yen and the swissy. Time will tell, and in the 24 hour forex world it seems that time is a resource that many are not prepared to wait for, but these are patient times.
Today’s Charts

EUR/USD

Prices broke through a very important support line on the euro chart, which could have an impact on the euro over the next few days, either as a test of resistance or reversal point. Traders noticed a breakout point exactly at 1.4400 which could be the first resistance if the pullback appears. The support zone with the possible next target at 61.8% retracement level of the red wave B may be next. Elliott wave traders are currently searching for the bottom of wave iii which is probably in process right now. Traders that missed this short opportunity in wave iii should stay aside now, and wait for a pullback near to the trend line for the possible bounce lower in the future, as the support line should now be reacting as the resistance for new lows in a long-dollar environment. They will also need oil going under $100 a barrel and holding there, equities pushing higher and forcing Treasury yields up, and the ‘Bail-out/Buy-in’ being accepted. Tough fundamental call there, but it is technically ready it would seem if the dollar finds buyers in quick time.

USD/CHF

On Friday the Usd/Chf came onto the radar with a possible move lower, but the pair bounced higher from the support area around 1.0660 on Sep 22 08. After todays move above 1.1000 on the swissy we have moved to the swissy daily chart. The current price structure is signaling for higher prices in the next weeks, especially if we are right with this double zig-zag correction which could currently be developing in the huge blue wave 4. The markets also hit and bounced higher from the daily RSI trend line support, which could be the important signal for a possible “over-bought” area in the future. If the Bailout rescue package ‘works’, then traders can certainly expect that move.

Report written by TheLFB Trade Team, LFB Services, LLC.

This entry was posted on Monday, September 29th, 2008 at 6:51 pm and is filed under Weekly market comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.